J. Crew Group, Inc. Announces Second Quarter Fiscal 2009 Results
Second Quarter highlights:
-- Revenues increased 6% to $357.6 million . Store sales (Retail and
Factory) increased 7% to $259.1 million , with comparable store sales
decreasing 5%. Comparable store sales decreased 0.4% in the second
quarter of fiscal 2008. Direct sales (Internet and Phone) increased by
6% to $88.2 million . Direct sales increased 12% to $83.2 million in the
second quarter of fiscal 2008.
-- Gross margin increased to 41.2% of revenues from 41.0% of revenues in
the second quarter of fiscal 2008.
-- Operating income increased 2% to $32.2 million , or 9.0% of revenues,
compared to $31.5 million , or 9.4% of revenues, in the second quarter of
fiscal 2008. Operating income in the second quarter of fiscal 2009
includes charges of approximately $2.6 million related to
underperforming stores and lease termination actions. Operating income
in the second quarter of fiscal 2008 included approximately $3.0 million
of costs related to our Direct channel systems upgrades.
-- Net income was $18.6 million , or $0.29 per diluted share, compared to a
net income of $18.1 million , or $0.28 per diluted share, in the second
quarter of fiscal 2008.
First Six Months highlights:
-- Revenues increased 4% to $703.3 million . Store sales increased 6% to
$499.8 million , with comparable store sales decreasing 5%. Comparable
store sales increased 1% in the first six months of fiscal 2008. Direct
sales decreased 0.3% to $183.5 million . Direct sales increased 14% to
$184.1 million in the first six months of fiscal 2008.
-- Gross margin decreased to 41.7% of revenues from 44.0% of revenues in
the first six months of fiscal 2008. The decrease in gross margin is
primarily related to increased markdowns as a result of beginning of
fiscal year inventory levels.
-- Operating income decreased 20% to $67.5 million , or 9.6% of revenues,
compared to $84.6 million , or 12.5% of revenues, in the first six months
of fiscal 2008. Operating income in the first six months of fiscal 2009
includes charges of approximately $4.9 million related to our workforce
reduction, underperforming stores and lease termination actions.
Operating income in the first six months of fiscal 2008 included
approximately $3.0 million of costs related to our Direct channel
systems upgrades.
-- Net income was $39.1 million , or $0.61 per diluted share, compared to a
net income of $48.6 million , or $0.76 per diluted share, in the first
six months of fiscal 2008.
Balance Sheet highlights as of
-- Cash and cash equivalents were $204.3 million at the end of the second
quarter compared to $113.4 million at the end of the second quarter of
fiscal 2008.
-- Inventories at the end of the second quarter were $195.3 million
compared to $197.8 million at the end of the second quarter of fiscal
2008. Inventory per square foot at the end of the second quarter
decreased 11% compared to the end of the second quarter of fiscal 2008.
Guidance
The Company currently expects third quarter fiscal 2009 diluted earnings per share in the range of
Conference Call Information
A conference call to discuss second quarter results is scheduled for today,
About
Forward-Looking Statements:
Certain statements herein are "forward-looking statements" made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements reflect the Company's current expectations or beliefs concerning future events and actual results of operations may differ materially from historical results or current expectations. Any such forward-looking statements are subject to various risks and uncertainties, including the strength of the economy, changes in the overall level of consumer spending or preferences in apparel, our ability to compete with other retailers, the performance of the Company's products within the prevailing retail environment, our strategy and expansion plans, systems upgrades, reliance on key personnel, trade restrictions, political or financial instability in countries where the Company's goods are manufactured, postal rate increases, paper and printing costs, availability of suitable store locations at appropriate terms and other factors which are set forth in the Company's Form 10-K and in all filings with the
Exhibit (1)
J. Crew Group, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Three Months Six Months Six Months
(Amounts in thousands, Ended Ended Ended Ended
except percentages and August 1, August 2, August 1, August 2,
per share amounts) 2009 2008 2009 2008
Net sales
Stores $259,080 $242,280 $499,806 $471,389
Direct 88,171 83,213 183,531 184,146
347,251 325,493 683,337 655,535
Other 10,304 10,782 19,988 21,318
Total Revenues 357,555 336,275 703,325 676,853
Costs of goods sold,
buying and occupancy
costs 210,327 198,543 410,160 379,234
Gross Profit 147,228 137,732 293,165 297,619
As a percent of
revenues 41.2% 41.0% 41.7% 44.0%
Selling, general
administrative expenses 115,016 106,199 225,685 213,040
As a percent of
revenues 32.2% 31.6% 32.1% 31.5%
Operating income 32,212 31,533 67,480 84,579
As a percent of
revenues 9.0% 9.4% 9.6% 12.5%
Interest expense, net 1,078 1,430 2,155 3,800
Income before income taxes 31,134 30,103 65,325 80,779
Provision for income taxes 12,524 11,980 26,270 32,155
Net income $18,610 $18,123 $39,055 $48,624
Income per share:
Basic $0.30 $0.29 $0.63 $0.79
Diluted $0.29 $0.28 $0.61 $0.76
Weighted average shares
outstanding:
Basic 62,323 61,693 62,227 61,443
Diluted 64,326 64,346 63,864 64,171
Exhibit (2)
J. Crew Group, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands) August 1, January 31, August 2,
2009 2009 2008
Assets
Current assets:
Cash and cash equivalents $204,274 $146,430 $113,438
Inventories 195,295 187,044 197,833
Prepaid expenses and other current
assets 32,158 34,926 39,086
Income taxes receivable 963 23,116 20,625
Total current assets 432,690 391,516 370,982
Property and equipment, net 203,223 201,675 183,892
Other assets 19,857 20,618 32,798
Total assets $655,770 $613,809 $587,672
Liabilities and Stockholders' equity
Current liabilities:
Accounts payable $116,110 $119,719 $117,009
Other current liabilities 82,207 83,889 75,994
Current portion of long-term debt 1,028 800 -
Deferred income taxes, net 4,049 4,049 -
Total current liabilities 203,394 208,457 193,003
Long-term debt 98,715 99,200 100,000
Deferred credits 72,185 73,815 73,484
Other liabilities 7,001 7,388 7,829
Stockholders' equity 274,475 224,949 213,356
Total liabilities and stockholders'
equity $655,770 $613,809 $587,672
Exhibit (3)
Actual and Projected Store Count and Square Footage
Fiscal 2009
Total stores Number of Number of Total stores
open at stores stores open at
beginning of opened during closed during end of
the quarter the quarter the quarter the quarter
Quarter
1st Quarter (Actual) 300 12 2 310
2nd Quarter (Actual) 310 9 0 319
3rd Quarter (Projected) 319 2 1 320
4th Quarter (Projected) 320 1 0 321
Fiscal 2009 Reduction of
Gross square gross square Total
Total gross feet for feet for gross
square feet stores opened stores closed square
at beginning or expanded or downsized feet at
of the during the during the end of
quarter quarter quarter the quarter
Quarter
1st Quarter (Actual) 1,864,133 52,185 (8,258) 1,908,060
2nd Quarter (Actual) 1,908,060 38,166 0 1,946,226
3rd Quarter (Projected) 1,946,226 9,890 (2,872) 1,953,244
4th Quarter (Projected) 1,953,244 4,512 0 1,957,756
SOURCE
Company, James S. Scully, Chief Administrative Officer and Chief Financial Officer, +1-212-209-8040; or Investors, Allison Malkin, or Chad Jacobs, or Joe Teklits, all of Integrated Corporate Relations, +1-203-682-8200